Hedge Funds Have Never Been This Bullish On Allegiant Travel Company (ALGT)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Allegiant Travel Company (NASDAQ:ALGT) to find out whether there were any major changes in hedge funds’ views.

Allegiant Travel Company (NASDAQ:ALGT) has experienced an increase in enthusiasm from smart money in recent months. Allegiant Travel Company (NASDAQ:ALGT) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ALGT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a peek at the recent hedge fund action encompassing Allegiant Travel Company (NASDAQ:ALGT).

Do Hedge Funds Think ALGT Is A Good Stock To Buy Now?

At Q2’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in ALGT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Allegiant Travel Company (NASDAQ:ALGT) was held by PAR Capital Management, which reported holding $135.8 million worth of stock at the end of June. It was followed by Diamond Hill Capital with a $62.6 million position. Other investors bullish on the company included Zimmer Partners, Millennium Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to Allegiant Travel Company (NASDAQ:ALGT), around 13.21% of its 13F portfolio. Owls Nest Partners is also relatively very bullish on the stock, earmarking 8.4 percent of its 13F equity portfolio to ALGT.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Zimmer Partners, managed by Stuart J. Zimmer, created the largest position in Allegiant Travel Company (NASDAQ:ALGT). Zimmer Partners had $36.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $23.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Eric F. Billings’s Billings Capital Management, Noam Gottesman’s GLG Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Allegiant Travel Company (NASDAQ:ALGT) but similarly valued. We will take a look at Chimera Investment Corporation (NYSE:CIM), Navient Corp (NASDAQ:NAVI), Bandwidth Inc. (NASDAQ:BAND), Mimecast Limited (NASDAQ:MIME), Apollo Medical Holdings, Inc. (NASDAQ:AMEH), Dana Incorporated (NYSE:DAN), and Advantage Solutions Inc. (NASDAQ:ADV). All of these stocks’ market caps are similar to ALGT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $390 million in ALGT’s case. Mimecast Limited (NASDAQ:MIME) is the most popular stock in this table. On the other hand Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Allegiant Travel Company (NASDAQ:ALGT) is more popular among hedge funds. Our overall hedge fund sentiment score for ALGT is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately ALGT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALGT were disappointed as the stock returned -2% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.